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Contracts between parties who have an on-going relationship often rely on informal norms, rather than formal legal rights, to resolve disputes and reduce transaction costs. Investors financing startup firms, however, may need to look outside of their existing network to find an entrepreneur with...
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This paper develops a theory of contracting among founders of a new firm. It asks at what stage founders agree to commit to each other, how they structure optimal founder contracts, and how this affects team formation, ownership, incentives, and performance. The paper derives a trade-off between...
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I show that VCs frequently have the right to veto specific operational and financial decisions even though they are equity investors with access to other powerful governance mechanisms. Across 182 first-round U.S. venture capital investments, restrictive covenants are commonplace with 92 percent...
Persistent link: https://www.econbiz.de/10013070833
The two essays that comprise this dissertationseek to explain the benefits of financial contracting in banking and venturecapital. The second essay, “Vesting and Control in Venture Capital Contracts,”examines the common practice of timing equity payments to entrepreneurs inventure capital...
Persistent link: https://www.econbiz.de/10013153562
We estimate the impact of venture capital (VC) contract terms on startup outcomes and the split of value between the … power to receive more investor-friendly terms compared to the contract that maximizes startup values. Better VCs still …
Persistent link: https://www.econbiz.de/10012865753
We estimate the impact of venture capital (VC) contract terms on startup outcomes and the split of value between the … power to receive more investor-friendly terms compared to the contract that maximizes startup values. Better VCs still … certain contract terms benefits entrepreneurs and enables low-quality entrepreneurs to finance their startups more quickly …
Persistent link: https://www.econbiz.de/10012480061
We estimate the impact of venture capital (VC) contract terms on startup outcomes and the split of value between the … power to receive more investor-friendly terms compared to the contract that maximizes startup values. Better VCs still …
Persistent link: https://www.econbiz.de/10012848535
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